Global uncertainty appears to take its toll on UK activity

Global growth worries and uncertainty surrounding the upcoming Brexit referendum seems to have finally dented UK activity. Indeed, all three Markit/CIPS surveys fell in January. The composite PMI now points to quarterly GDP growth of only around 0.3% and has fallen below that of the euro-zone again. These uncertainties have also resulted in implied expectations for the first rate hike being pushed back yet further and a depreciation of sterling. Admittedly, the market movements effectively ease UK monetary conditions and global growth worries have shown a tentative easing more recently – resulting in a rebound in equities. Nonetheless, Brexituncertainty should keep a check on the recovery for now, with a potential for a bounce-back as the picture of the UK’s relationship with the EU becomes clearer.